Executive Summary: Right after the U.S. Supreme Court issued decisions favoring employers in a variety of employee lawsuits based on federal statutes, including retaliation under Title VII, the New Jersey Supreme Court has moved that state in the opposite direction under its corresponding statutes, in Battaglia v. United Parcel Service, Inc., No.A-86/87-11 (N.J. Supreme Court, July 17, 2013). Employers who do business in New Jersey should take note.

First, the bad news for New Jersey employers:

Under New Jersey law, an employee who complains about perceived unlawful workplace conduct, and who then experiences an adverse employment action because of the complaint, can prevail in a retaliation suit even if the employee was incorrect about the conduct being illegal, as long as the employee had a good-faith belief that it was.

An employer's inadequate response to an employee's whistleblowing can be construed as evidence, albeit indirect, of a causal connection between the employee's complaint (protected activity) and the employer's action against the employee.

But there is some good news from the same opinion:

An employee who blows the whistle on workplace misconduct must be specific about the complained-of activity. Vague or generalized complaints, or complaints about minor matters, don't suffice to hold the employer liable for retaliation.

Under CEPA's waiver provision, a plaintiff cannot simultaneously sue under CEPA and another statute if the protected activity is the same.

A LAD plaintiff may only recover damages for future emotional distress if an expert opinion supplies proof of permanency.

To succeed on a fraud-based CEPA claim, an employee must have reasonably believed the activity complained of was occurring and was fraudulent.

Facts

Battaglia, a male UPS manager and long-time employee, heard his male supervisor and several high-level male managers, when talking among themselves, use vulgar, sexist language in referring to female employees. No such comments were made in the presence of any female employees, however, and there was no proof of a actual discrimination against women or other evidence of a hostile work environment. Battaglia alleged that he complained to his supervisor about these comments, but that the misconduct continued. Also, after observing his supervisor flirt with a female manager, Battaglia advised the supervisor to be careful as there was a rumor circulating that the two were having an affair.

Battaglia also complained to his supervisor about other managers possibly misusing company credit cards and taking "liquid lunches" and not returning to work afterward, though he admittedly did not believe the conduct in question was fraudulent. Battaglia then sent HR an anonymous email containing non-specific allegations of improper language and unethical behavior.

UPS investigated Battaglia's complaint, but said it had difficulty knowing how to investigate the vague allegations in the anonymous email. In the meantime, UPS disciplined and demoted Battaglia because, according to UPS, of some poor workplace behavior unrelated to his complaints. He missed five months of work, which he attributed to depression he suffered due to his demotion.

Battaglia alleged that he was demoted in retaliation for his complaints, and that the investigation was a sham which his managers set up. He sued on several grounds, among them UPS's alleged violation of two New Jersey statutes, the Law Against Discrimination (LAD), which roughly parallels federal Title VII, and the Conscientious Employee Protection Act (CEPA), which protects whistleblowers in the workplace. After a lengthy trial, a jury returned a verdict on Battaglia's favor on both counts, awarding damages for economic loss as well as emotional distress. The intermediate appellate court affirmed in part and reversed in part. Both parties appealed to the state Supreme Court, which upheld the jury's LAD verdict for the plaintiff but reversed the CEPA verdict.

Court Rulings

1. A retaliation cause of action under LAD only requires the complaining employee's good faith belief that the unlawful conduct occurred, not an actual violation.

To recover for retaliation under LAD, a New Jersey employee need only show that he or she had a "good faith belief" that the conduct the employee complained about violated the law. There need not have been actual discrimination against an identifiable victim. The New Jersey Supreme Court so held, reversing the appellate court.

The Court cautioned that its holding was not intended to create a civility code—though its holding arguably pushes in that direction—and stressed that in this particular case, underlying facts reflected a supervisor's reoccurring statements to his subordinates, as opposed to, for example, a single comment by a manager or conversations among co-workers.

The Court declined to establish a bright-line test or objective criteria for employers to follow, creating fertile ground for future litigation over what constitutes an employee's "good faith belief." The Court did offer one ray of hope for employers, hinting that the result in this case could have been different if UPS had investigated Battaglia's complaints more thoroughly.

2. A whistleblower must be specific about the conduct complained of, but when it is, the employer must conduct an adequate investigation.

Employers will be glad to hear that employees cannot claim to be whistleblowers on the basis of generalized accusations. Instead, they must describe the misconduct with "care and precision." CEPA does not protect "vague and conclusory complaints, complaints about trivial or minor matters, or generalized workplace unhappiness." Battaglia's anonymous letter made no references to credit cards or business lunches, and his oral complaint was too vague to include these activities.

Again, though, the Court stated that analysis of a fraud-based CEPA claim should focus on the employee's good-faith belief that the complained-of conduct was occurring and was fraudulent, not whether the conduct was actually occurring or whether it met the legal definition of fraud. In doing so, the Court may be signaling a move away from an objective standard to a more subjective standard in analyzing whistleblowing activity.

The Court also discussed the employer's response to whistleblowing, noting that an inadequate or cursory response by the employer could be construed as indirect evidence of a causal connection between the protected activity and retaliation. An inadequate investigation could be evidence that the employer ratified the retaliatory action, or was somehow complicit.

Under LAD, emotional distress damages are easier to recover than under general tort law. Lay testimony suffices for an employee to recover damages for emotional distress arising from humiliation, embarrassment, or indignity. In determining the amount of such damages, trial courts should focus on the conduct of the harasser and not on the extent of the plaintiff's injury, according to the state's high court.

But to recover damages for future emotional distress, expert proof of permanency is required. In this case, held the Supreme Court, where there was no such expert proof, the trial court inappropriately allowed the jury to speculate regarding future emotional damages, by allowing the jury to consider Battaglia's age and life expectancy.

4. Plaintiffs cannot recover for the same misconduct under two different statutes.

Finally, the Court briefly discussed CEPA's waiver provisions, urging trial courts to be careful to prevent plaintiffs from bringing parallel claims under two or more statutes. Under CEPA's waiver provision, a plaintiff cannot maintain claims under both CEPA and another statute where the protected activity is the same. For example, CEPA's waiver provision would presumably prevent Battaglia from asserting a LAD retaliation claim based on his objection to his manager's derogatory comments about women while maintaining a CEPA claim based on the same facts. The Court noted that no harm occurred here because Battaglia sought only one recovery for his CEPA claims and his LAD claims.

Employers' Bottom Line:

Make sure there is a mechanism in place for employees to file complaints of workplace misconduct; that the mechanism is in writing and is distributed and available to all employees; and that those who receive such complaints are well trained in standard protocols for investigating them.

Take employee complaints of unlawful conduct seriously. If an investigation is warranted, do a thorough one, document it, and share findings with the employee.

Train employees, especially those with supervisory and management responsibilities, that no workplace conversation should include derogatory comments relating to race, gender, age, or any protected categories, and implement and enforce rules to prevent such comments.

Counsel should apprise New Jersey trial judges that a jury charge on whistleblowing must specifically identify the complaint that constituted whistleblowing, and should make sure that juries are not permitted to award duplicate damages under separate statutes.

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